Friday, April 16, 2010

Tax Day Reflections


Then the Pharisees went and plotted to entrap him in what he said. So they sent their disciples to him, along with the Herodians, saying, “Teacher, we know that you are sincere, and teach the way of God in accordance with truth, and show deference to no one; for you do not regard people with partiality. Tell us, then, what you think. Is it lawful to pay taxes to the emperor, or not?” But Jesus, aware of their malice, said, “Why are you putting me to the test, you hypocrites? Show me the coin used for the tax.” And they brought him a denarius. Then he said to them, “Whose head is this, and whose title?” They answered, “The emperor’s.” Then he said to them, “Give therefore to the emperor the things that are the emperor’s, and to God the things that are God’s.” When they heard this, they were amazed; and they left him and went away.
Matthew 22:15-22

For Jesus and his disciples, living in an occupied land, taxes were a sign of oppression and a sign of Caesar’s power over them. Compared to Jesus’ time, we live in tax heaven.

Our taxes, by contrast with the taxes in Jesus’ time, are determined by elected representatives. They are the result of a democratic process. The government is not a distant oppressor in Rome (or London). The government is us. We, the people, decide, together, how we will spend a portion of our common wealth to benefit our citizens. There is waste, of course. And there are programs we don’t like. But overall, it works pretty well. We have roads and schools. Our food is safe. Our bank deposits are protected. There are fire departments and police departments, and a vast system of national defense. And together we do the things that none of us could do by ourselves.

For the last half century our taxes have been going down, and thanks to the stimulus bill passed by Congress last year, 95% of us saw a tax decrease this year, although listening to the strident voices of protest you would think the opposite was the case.

The marginal tax rate, which is the highest rate paid by the wealthiest Americans on their next dollar, peaked in the late 1940’s and early 1950’s at about 90%. Interestingly, it was in the middle of the last century, at a time when tax rates were highest and regulation was tightest, that we enjoyed our greatest prosperity. It was in those years that the middle class enjoyed unprecedented growth and real family income made dramatic gains. Since the mid 70’s, almost all of the income gains have gone to the wealthiest Americans, while their share of the tax burden has steadily decreased.

Still, the income tax is the only progressive tax we have. Almost half of our families don’t pay any income tax at all. They do pay Social Security taxes, Medicare taxes, as well as sales and property taxes, etc. But the wealthy pay a significant percent of the total income taxes collected. As Jesus said, “From everyone to whom much has been given, much will be required; and from the one to whom much has been entrusted, even more will be demanded.” That’s not a bad thing.


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